January 08, 2019

Rajat Gupta, Steve Cohen - Not Crushing It in Comeback Struggle

The ruling in "U.S. v. Neman" redefined "insider trading" in a way that let Michael Steinberg off the hook. He had been an employee at Steve Cohen's SAC, which has since be shut down.

In his aggressive pursuit of being declared innocent of insider trading former McKinsey head Rajat Gupta hand appealed his conviction the Second Circuit ("Gupta v. U.S."). That relied on an interpretation of "U.S. v. Neuman" and contended the jury instructions were in error.

The Second Circuit didn't buy that.

As Bloomberg reports, Gupta will continue going through life branded as a criminal. Meanwhile, since his release from prison in 2016, he has been struggling for a comeback in business. That has gotten traction in his homeland of India where he continues to be revered, especially for his philanthropy. However, not much progress has taken place in the U.S. For example, his former employer McKinsey won't restore his name to its alumni list.

Incidentally, hedge fund genius Steve Cohen is also not winning at the comeback game either.

Although Cohen was never arrested, his brand was hit hard as the feds arrested a number of the employees of his SAC. They went to prison.

Cohen, however, was barred by the SEC from accepting outside money from investors for two years. When that was up, he created hedge fund Point72. Last year that only generated for investors a 1% return on their investment. Here is coverage of Cohen's disappointing performance. Meanwhile Bridgewater Associates' Pure Alpha Strategy hedge fund killed it.

Takeaway: Investing in a career comeback is a wild card. There's no predicting results.

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